tv Bloomberg Markets Asia Bloomberg August 8, 2018 10:00pm-11:00pm EDT
transformation plan under the microscope. looking at for gdp data as well. we have inflation numbers out higher than anticipated. in all his food for thought. with an interest-rate decision later on, we could see 25 basis points higher in terms of the benchmark. 50 basis points added to that. it would be the biggest move in a decade. let's get to the numbers out of the u.s.. out of china we have cpi later on. -- focus onrk is on what is happening, we are waiting on a decision. you have stoxx in manila set for a second day of gains. we are seeing a rally in philippine bonds. we could have a third rate hike. potential economic growth. asian stocks are mixed but
mostly higher with chinese stocks leading gains. after losing over 1% on wednesday. we have the offshore yuan losing ground. the onshore rate is up 0.1%. move that thean's chinese inflation on its upward course coming in at 2.1%. that could push chinese bond yields higher. i want to highlight new zealand. kiwi shares rising the most in a month after that decision. the kiwi dollar is flipping as the central bank pushes out its rate hike outlook. as we wait on u.s.-japan trade talks, the nikkei faltering. you have electronics makers the biggest drag in tokyo. yamaha motors falling on reports of improper fuel and emissions test. let's check on commodities. losses as china puts tariffs on u.s. energy products.
aluminum surging in shanghai. this as a mystery chinese trade is feeling to gain -- fueling up again. .- fueling the gain rishaad: we are looking at second quarter gdp to be up 6.6% on last year. we await these numbers. there is a lot of pressure with the inflation reading on the central bank tight breaks -- hike rates. >> the economy is broadly doing well. gdp numbers are strong. inflation is at a five-year high. they are struggling with higher rice prices and higher oil prices are also impacting. there is a feeling the philippine central bank has to move by as much as 50 basis points.
movekers are considering a , such as lowering tariffs or making it easy to get imports. all accounts, there is a certainly pressure on the positives. governor, willk he be behind the curve? >> there has been with the weakness of the currency. if you were to compare them to indonesia, indonesia was being very proactive during the emerging markets volatility. they made it clear they were trying to get ahead of the curve. bank is a perception the of the philippines is behind the curve. if they move aggressively that may go towards setting their own narrative back on track. >> i want to put this into context with regard to other parts of southeast asia and how we have seen tightening taking place. this is a chart from our gtv
library. it is the case for more hikes in the philippines. let's have a look where benchmarks are. philippines is in white. we have a case for real rates. we're looking at negative two. normalization would require a big move from the central bank. really rates in malaysia, 2.5%. this is what we have in terms of the neighborhood. >> the philippine story is different from the broad emerging-market story. they are hiking for domestic reasons. indonesia, perhaps india -- >> we just got the gdp number, weaker than anticipated. there we have it. you have got to then balance a rate hike with how much it takes to slow the economy down as well. >> it takes a while for monetary policy to impact economic activity on the ground.
there is a lag effect. theaps some caution in bank's thinking whether to go 50 or 25. is a softer than expected read for sure. it may point to even further slowing. the global economy is coming under pressure with the backdrop of the trade tensions from the u.s. and china and the likes of -- we will see whether or not this plays into the thinking. overall -- 4%. >> there is no doubt that would cause pain at some point. rishaad: thank you. an interview tomorrow with the philippine central bank governor. 9:00 hong kong time. you can also turn to your bloomberg for more on this. and have a tliv
look at analysis from bloomberg's expert editors. that is what it looks like. >> moving along, a look at first word headlines. we have the latest. >> saudi arabia is threatening more pressure on canada for its criticism of the arrest of women's rights activists. the foreign minister says the next reality -- retaliatory step could affect investments. the saudi central bank and pension fund have begun selling canadian assets. canadian stocks and bonds were little changed. >> canada will always stand up for our workers and companies. we need to make sure we are protecting canadian interests in any situation. we continue to engage with the government of saudi arabia. the minister of foreign affairs had a long conversation with their foreign minister yesterday.
diplomatic talks continue. >> the ruble fell on news the u.s. will sanction russia for the nerve agent attack in the u.k. the penalties would take effect around the 22nd of this month. sergei scribble and his daughter fell ill after coming into contact with what british and american authorities say was a powerful russian neurotoxin. pound fell to its lowest in nine months against the euro amid concern the u.k. could end up leaving the european union with no deal on economic ties. the pound weakened against all its g10 peers. markets areassigned starting to focus on the risk of a no deal brexit. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
resignedis a sense of inevitability. i got that sense from business leaders here in the past few days. you get that sense from officials in terms of their response. it is a $16 billion worth of goods they had already flagged this was something they were going to be pulling the trigger on. now we have the date, just after the u.s. imposes there's. you're talking about 333 different products from the u.s. side including things like cars and coal and medical devices amongst the grouping. is a pointes us to the end of august you have both ones in total with tariffs $50 billion worth of goods on both sides. potentially post-september 6 when you have this review period in the u.s., this additional $200 billion worth of goods they want to target, you could get those tariffs imposed at some point. potentially the middle of
september. you have the u.s. or china suggesting it would retaliate. you could get towards the middle of september $250 billion on the u.s. side, $110 billion on the chinese side. in terms of the economic impact we saw the trade data yesterday still looks solid. further down the line you have warnings from ups. saying we are getting closer to the edge on this issue. we have had oxford economics crunching the numbers as saying if we get into a full-blown trade war, by 2020 you could see a cut to the overall global gdp of 0.7% for china. you could see a loss of 1.3% by 2020. that is according to oxford economics. there is no sign there is an offering for these parties. there are no official talks. rishaad: they are having a bit of a go at u.s. energy. why is that significant? risk is potentially a because china is dependent on
much of its energy imports. has become increasingly dependent. it is targeted as part of the $16 billion fuel products including propane, gasoline, diesel. it has not targeted crude just yet. watched crude imports .ake up -- tick up we have seen reports of that starting to slow. it could be they put tariffs on crude at some point down the line. cap's adjusted they might hit liquefied natural gas. it is a risk because they want and they were hoping to get some of that lng from the u.s.. it may be beneficial to australia, who supplies lng to the chinese market. they are trying to target sectors of the economy were trump would like to see growth.
possibly that is part of the calculation for the chinese in hitting out. rishaad: thank you. tom mackenzie in shanghai. moving to how this escalating trade tension is weighing on the you when and other currencies, we are joined by senior currency strategist sean callow. i want to start by looking at what's been happening. the yuan has been in a trajectory since march of only going one direction. we seem to have slowed down that move. i'm going to bring this chart up from the gtb library. library. chinese investors are not dropping yuan denominated assets. , the was this huge outflow sale of chinese assets, and we are actually positive, at least we were in june. opped?e rot st
>> certainly we got to a demarcation point. the storythink with this time last week from china that there would be probably know break, essentially you would have to be very brave to be still buying dollars close to seven against the yuan. that seems to be a line in the sand for now. the pboc has $3 trillion in reserves. you could be forced to push them on this. steps forrse, those requirements on fx forward, if there was not such a big problem with outflows and more cautionary, because it is a big deal what we have had dollar strength, there has not been any great sign of strain in terms of capital outflows from china.
it did not seem to be policy matter. rishaad: it does not seem to be that now. they just do not want momentum to build and have the yuan as a one-way bet. we look at the reserve as well just a day before yesterday. a share reserves party much plot. this is a chart in are gtb library.- our gtv idea they you the have nothing going into the market and defending the currency, which is perhaps another way of saying that is allowing the currency to depreciate. are they doing it in an orderly way? >> it seems to be orderly for the most part. they're worse a just and an intervention through the -- we do not have the data at the moment. overall, the trade surplus is still strong.
that is supported for the currency. there is this clampdown on outflows. you would not think the pboc is under great pressure. i think perhaps the big picture is quite interesting that as indicated for the past couple of years, they really don't want to particularly weak currency. and definitely seems to be something that will keep up this week. this is a last resort in terms of weapons in the trade war. currently that is broadly stable, maybe depreciating. they seem to be content with that. waraad: would be trade perhaps getting a bit -- getting more vicious? how does australia figure? >> is certainly very concerned from a policy makers here made it very clear that australia has
no interest in getting directly involved. they would like both sides to back off, the u.s. and china. very important trading partners for australia, especially china. anything that would have an impact on chinese trade volumes would be great concern. government officials here and most recently just yesterday from reserve bank government, talking about great concern over the trade situation around the world. it is mostly the focus on the u.s. and china. it is driven mostly by china. that is the trade policy from the u.s., the trade policy from the white house, is cause for concern. there is some confidence that things have not changed too much between australia and the majority of its trading partners. theaad: quickly, with biggest other story in town,
sterling, nine-month lows against the euro, 11 month lows against the dollar. what is being priced in? a hard brexit? >> i think we are getting a lot closer. my colleagues in london have been calling cable low and sterling for some time thinking there just was not enough risk priced in. two much optimism. now we have the bank of england rate hike out of the way it does not seem they're going to be touching rates for many months. until next year, perhaps. markets are starting to price that in more. you can see the activity in speculative position and options. that is where the weight of money is going. the market is as a mystic on the outcome of these negotiations for the u.k. economy -- has a stic on thesesimi
rishaad: this is bloomberg markets. everyone from wall street to washington has one question for elon musk. what is the source of his funding he has secured to take tesla prime it -- private? softbank vision fund is not shipping and. -- chipping in. spoke with the ceo of softbank about taking tesla private.
according to people close to the matter, those talks are said to have fizzled because of a conflict over control. plan where he a remained in control and softbank and its vision fund have taken many large stakes in a number of technology companies, but they also have taken control. softbank has previously invested nvidia, and gm, but this deal did not take place. there are no more talks. this news comes one day after the ceo elon musk announced he intends to take tesla products and has secured financing, although this has not revealed who the financing is coming from. there is concern about all the shares that would be taken off the market. if you go to our bloomberg chart in gtv, it is interesting to ears, thosember of b
who have taken short positions, have had a tough go of it. the company is at the end of its rope in terms of questions about where funding is coming from. it is overspending. they seem to come up with yet another plan. betting against tesla has been difficult. many are waiting to hear more details on what bank or private source of investment elon musk has disappeared -- secured. rishaad: a programming note, we have an interview with softbank's cheap -- chief operating officer. that is 2 a.m. friday hong kong time. 2:00 p.m. thursday in new york. let's look at the latest business flash headlines. elon musk we have just been talking about. state-ownedna's banks to fund a new production plan. making a markesla in the world's biggest electric vehicle market.
and finally making a profit. shanghai authorities are helping discuss loans from the biggest lenders. tesla will need $5 billion to bloomberg -- bring the plans to full capacity. new york has approved a one-year industrywide cap on your licenses. it has given authorities -- to set minimum pay rates for drivers. the number of ride hailers soared to more than 80,000 day. uber managed to defeat a similar proposal years ago. million -- ford is celebrating the 10 millionth mustang. it was the world's top-selling sports car for three years in a row. the company marked the milestone with a special parade at its dearborn headquarters. included theon
mustang which topped 10 million of them. let's look at what is going on as we head toward the lunch break. pressure and under it is all down to faking it. >> fake news perhaps. that is not the case. must up, yamaha, conducting improper emissions and fuel inspections. we are waiting to hear from all companies today. -- a cosmetics maker implied there was upside to its guidance. ,astly, a look at pioneer surging as much as 14% on a report it is in talks to raise capital as part of an overhaul of its business. pioneer has confirmed one
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miss --cannot do dismissed the idea of a more interventionist policy. a strong dollar once the wepetitive edge -- blunts competitive edge. ae philippines faces question. how much to hike. it may be influenced by second-quarter gdp growth. basis points a rise. the biggest hike in a decade. commercial data and analytics acquired for $6.9
6% there. lower than the lowest estimate. it is making itself felt. >> that is the case. sliding 0.8%. reverse and again we saw on earlier data. -- reversing the game we saw. following that. broadly speaking, asian stocks are mixed at higher. chinese shares, leaving that. up 1.4%. yuan.e, -- against the greenback. speculation that could push bond yields higher. kiwi shares are rising.
the kiwi dollar, slumping over 1%. this as the central bank pushes out it's outlook. a seven-week low. a two month high. this as trades are feeling the gain. the company, the senior vice president, thank you for joining us. what did you make of the results? >> the results were in line with our expectations. the group did well.
the key takeaway, they managed to improve yields for passenger as well as cargo business. which helped to narrow losses. they did report a positive number. they have this turnaround plan in place. where are they with that? i do think they are on track to turn around the company. they reported losses. they reported a small profit. issues,tanding trade on track tod, are report a significantly better number. we're forecasting a profit of $3.9 billion hong kong. the thing is, you
mentioned yields, pretty good there. as you go through the numbers, you can see the narrow loss they had was down. not because of cost cutting. takethat mean they have to drastic measures? that --he number >> the number that was significant was net fuel costs. nonfuel charges were only up three percent-5%. there is some result there. they are only halfway through the transformation program. seeave more time before we whether they cut costs further. the increased yield is a result of the revenue management
program which i think did quite well there. stackd: how does cathay up against full-service airlines? the big threat from these mainland chinese carriers? if we compare the results, singapore airlines did group or positive profits in the first six months of the year. has lagged behind. chinese carriers have a huge advantage in their domestic the keyead medium-term, issue is the challenge of more mainland travelers traveling from their cities through hong kong. that is the medium turn challenge -- term challenge.
he said to reporters yesterday, the carrier is 800ning to hire more than staffers. surely they should be cutting them. it has to do with the fact, all while they are going through the transformation program, they still want to have growth. they are bringing in more aircraft and introducing more routes.- you would have to add on flight crew and pilots to expand the r outes. is about cutting in the right place. all that is going on at the same time. let's move to the big story.
the trade war taking place in washington and beijing. cathay, that impact given the exposure to the cargo side of things? cargo can account for 30% of profits. hong kong is in the middle of everything that goes on between china and the u.s.. we are seeing real impacts in terms of the trade war. that will come through in a more meaningful manner. it could have a real impact on business. the first half, they have not been impacted by the trade dispute. the worry is the trade dispute will trickle down to them in terms of their cargo volume. for us, the key worry.
rishaad: does this turnaround plan address the biggest need, the structural need? as a hub airline? are people using it as the gateway to china any longer? they have to reinvent themselves, don't they? are they? over the past few years, growth has been slower than china. the region. taking consumers are direct flights where available. we have seen cathay pacific lose market share. whether or not they are able to reinvent themselves, what they have to do in the immediate years, address profitability. focus on profitability rather than growth.
the threat from the middle eastern carriers, how does that affect them? the middle eastern carriers have provided strict competition. observe, the growth has been slowing down over the last 12-18 months. mid to single digit growth. competition from the airlines has lessened. primarily because they are struggling themselves to fill up the cabins. pacific, their competitors would be chinese carriers. which are adding capacity at a quick pace. final question, how is your rating of falling.
what is your price target? cathayave a hold call on pacific. -- maintainined results. the key worry, everyone's worries, what the trade war impact would be like. therefore, i think that is going cloud.inue to cast a which is why we have maintained the hold call. thank you so much. joining us from singapore provide coming up, feeling the heat. what to expect. later on thursday. this is bloomberg. ♪
results in 90 minutes. a ramp-up in competition. now, what is the impact likely to be? even though the cuts does not happen until july, we suspect all the top carriers, they started adjusting and redesigning their plan. they become different. they will design their plans. it could be both got more aggressive. in terms of their plans. chinaiced in april, mobile actually had declined with 4g users.
even though the figure was better in may, second quarter, it was pretty weak for china mobile. >> what about broadband? how is that playing into this? mobile hasd, china been aggressive. it even though it has been very successful luring users. it is about 30%. user.rage revenue per >> than the peers. this is difficult to penetrate, it is difficult -- different than mobile. you have to get into the home to change the wiring. has been very successful. home penetration. -- itre the only carrier is tough for china mobile to scale up revenue.
>> is that when we focus on? -- what we focused on? >> investors have been keen to know the plan in the third quarter. >> down the road as well. >> correct. >> they want to know the plan. even though the company said they would cut it. what about next year? also, one thing investors would be keen to know is the impact of the listing. stake,ough they have a they can have accounting games. subscribers, it is beyond my imagination. live from bloomberg intelligence.
let's take a look. cathay pacific, doing well in hong kong. gaining altitude. >> we do have cathay pacific gaining ground, 4%. despite the surprise loss, a turnaround may not the so easy. you were talking to a guest to said he believes cathay pacific will make it. zte jumping in hong kong. jumping as first half revenue is seen as tracking. aluminum futures at a two month high. tower,g in, china subdued trading, around 127 hong kong dollars. also, it is to be added to the china all shares index as of august we second.
adding to the loss. investors continuing to shy away tend totech plays which be cash burning. despite china's ambition, it is unclear chinese drugmakers have it any edge over multinationals. we do have this robust pipeline of ipo's. dark clouds ahead because of this trade war. we heard his outlook for the rest of the year. >> we have something like 240 companies that are in the pipeline. date. to close to 130 companies listed. that number is basically the same as the last year combined.
dateised $187 billion to hong kong. the amount of money we raised last year, the whole year. haven't even gone into the third quarter. the third quarter and fourth quarter is the peak. the second half is different from the last second half. be market is going to directionless. and people don't understand see how this trade war is going to go and how the market is going to react. volatility is going to be up. trading environment is going to be difficult. ipo market in hong kong, asia, hong kong in particular. its the third quarter and first part of the happens in the--
third quarter and first part of the fourth quarter. weight inll your performance going ahead? it is really the overall trading environment. it changes depending on trading. the bulk of our revenue comes the actual charges we make on trades. how many people are trading and how actively? how deep, dictate earnings results. second half will be more challenging than the first. rishaad: breaking news. bloomberg and twitter have got together to launch this. the first global news network designed for social media. live video coverage. bulletins verified by bloomberg. do jump on.
our marketstting against each other. the blue chart, the white line, trading volume. that is a huge divergence. that shows people are reducing leverage in stock markets. their risky cut bets. do not want to invest in stocks. about $3t has dropped trillion, you can understand why. the white line shows leverage in the bond market. trading volume at a record. hear thatly going to rose again. china isof money in
really rapidly changing. we also have the seal disparity. chart shows the two markets. a broader picture. thannk that will be better that. clark's i will be the judge of that. my chart will show china has coren impact on china's operations. if you look at the chart, the white line shows triple a yields on the corporate sector. chinaher line is the government bond yields. the spread between the two has narrowed to the lowest since november, 2016. if you look at the bottom panel, the yellow line showing interbank offered
rates. the lowest in three years. these are showing china's looser monetary policies have benefited the corporate center -- sector. that we doe fact find it banks have not been lending to them. are they lending to them at a lower rate than they used to question mark -- used to? >> chinese banks are getting lower costs. also rates are lowering with a good size and scope. , they caning costs offer lower rates for the corporate sector. >> your retort. >> i cannot beat that. it goes to show if you are betting on stocks, cut leverage,
there is a lot of leverage in the system despite what the central banks are trying to do. the full results in cricket, win, a tie and a loss to read i'm going to call it a tie. featured on bloomberg. you can catch up with key analysis. positiont the market as we wait for limiting less to ingles david in glass -- to take the helm. one .66% -- 1it, .66% higher. ♪ this isn't just any moving day.
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